Oracle series #2: Vishal Shah aka Deutsche Bank

One of the more absurd phenomena in energy discussions is the reverence accorded to Wallstreet. If an investment bank says something nice about renewables this is treated as uniquely credible message. That it is often people with left wing sympathies who do this, makes the phenomenon even more absurd. This is how the process works. Bankers write non-peer-reviewed report on something. Then copy-pasters in environmental/renewables media credulously repeat what was said (minus conflicts of interests statements) without ever linking to the original report. Here is a recent example from UBS and Citigroup (also in Guardian). If you read the report there is not much. Strong claims are backed up mainly by hot air and some comparisons are so absurd as to be comical. For example, one talking point was that electric vehicle is already cost competitive with a conventional car. What was not highlighted by the bankers, was that their “conventional car” was Audi A7, “an Audi limo for those who like to drive as well as waft about in luxury”

But who is Vishal Shah? Googling him reveals that before being hired by Deutsche he contributed to the success of Lehman Brothers (and Barclays). Being a financial analyst he has left behind a trail of recommendations which help us to understand how clear his crystal ball actually is.

He promoted Evergreen solar stocks. The company promptly drifted to bankruptcy.

He has been cheerleading First solar, whose stock collapsed.

He has also been cheerleading Suntech Power, which (this is getting boring isn’t it?) went bankrupt.

When the second gold rush was supposed to begin, solar stocks proceeded to drop substantially.

His ranking among the analysts is less than stellar. Poor guy. I don’t in fact think that Shah is worse than other analysts. He has the misfortune to work in a field that has been a lousy investment. He came to my sights only because he happens to generate very visible nonsense on a topic that I follow rather closely. It is a cause for concern when people base their faith on fighting complex long term challenges such as climate change on analysts whose work is, after all, about selling financial instruments during the next quarter. These people do not have a special crystal ball that makes them any wiser than random person from the street.

2 comments

Only thing that is even worse than the predictions of financial analysists are the “scientific” long term technology predictions from EIA, IPCC, GB, or other similar institutions that are ordering scientific predictions. And worst of all predictions are the predictions from old industry. Car and oil industry long term predictions are the absolute bottom. Heavy industry does not fare significantly better.

The most notorious failures have been the Toyota’s investment on hydrogen fuel cell technology, that is just nuts, because that technology is already out-dated although the commercial feasibility is predicted by Toyota to happen some time in 2030’s.

Other failure in grand scale was that German utility companies totally failed to see what is the impact of Energiewende to the market price of electricity. Only EON saw this as it has decided to divest all baseload power generation assets by 2018. Including nuclear power assets that are in the most difficult position with wind and solar power. Although even EON was few years too late.

Typically these 40+ year long term predictions from IPCC, EIA & co. are falsified within two years as there is significant discrepancy between actual reality and the trend of prediction.

I think that the best long term predictions comes from the likes such as Google, and other who are dealing with new technology, because they have better grasp of the nature of new technology.

I think that the Swanson’s law is the best model for the long term prediction of technology and it can be applied for other new technology than solar panels.

When making long term predictions, past information is irrelevant and often misleading. The most important thing is that you must understand the fundamentals of technology. And try to understand what is the innovation potential of technology.